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INTERNATIONAL BUSINESS COMPANIES - IBC’S
INTERNATIONAL TRUST IN
Introduction The trust Law applicable in Stated below are some of the advantages
offered by The
availability of tax treaties between The following apply: Cyprus trusts are not subject to exchange control, provided the settlor and the beneficiaries are non residents of
Cyprus, and the trust property is situated abroad.The
establishment of international trust companies and the high standing of the
legal and accounting professions in Cyprus, ensure the availability of
professional and expert advice as well as the management services by trusts
created under the Cyprus trust law. There are no registration or reporting
requirements for trusts established in There is
no special international trust legislation in International trust law The House of Representatives of the Republic has passed the
"International Trusts Law of 1992", whose aim is to create the
proper environment for the foreign investor to establish international trusts
in The main provisions of the law are
as follows:- An international trust is a trust where the settlor
of which is not a permanent resident of Cyprus, where at least one of the
trustees is at all times a permanent resident of Cyprus, where no beneficiary
other than a charitable institution is a permanent resident of Cyprus and
where there is no immovable property situated in Cyprus amongst the trust
assets. It also clarifies that a Cyprus International company or partnership
could be beneficiaries or Trustees of a The duration of the trust, notwithstanding any provision in the law of
Under the new law a settlor is deemed to
have ability to dispose of his assets to an international trust if at the
time of such transfer he is of full age and of sound mind under the law of
the country in which he is a permanent resident. The Inheritance Law of Notwithstanding the provisions of any bankruptcy or liquidation laws
in Cyprus or in any other country, and notwithstanding the fact that the
trust is voluntary and without consideration or is made for the benefit of
the settlor and/or of the spouse of the settlor or any of them unless and to the extent that it
is proven to the court that the trust was made with intent to defraud persons
who, at the time when the payment or transfer of assets was made to the
trust, were creditors of the settlor shall not be
void or void able. The law specifies that the burden of proof of such intent
of the settlor lies with the creditors seeking to
annul the transfer made to a Subject to the provisions of the instrument creating an international
trust, the trustees will be allowed at any time to invest the whole or any
part of the trust funds in any kind of investment wherever the investment is
situated and whether or not the funds have already been invested. Any investment
made by the trustees may be varied or retain its original state as long as
the trustee exercises diligence and prudence that a reasonable person would
be expected to exercise in making such an investment. The possibility to change the proper law of international trust is
expressly provided in the new law both as regards a change to the law of
Care has been taken in the new law for judicial approval of any
arrangement which varies or revokes the terms of the international trust or
enlarges or varies the powers of management or administration of the trustees
under certain conditions. The court shall not approve any proposed
arrangement unless it is satisfied that such proposed arrangement appears to
be for the benefit of the person applying for it without affecting the rights
of other interested parties. Confidentiality takes a prominent position in the new law and is
imposed on the trustees and on any other persons not authorized by law to
have knowledge of the information or documents which disclose the name of the
settlor or any of the beneficiaries or of the
trustees deliberations as to the manner in which a power or discretion was
exercised or a duty conferred or imposed by law or by the terms of
international trust was performed. Likewise disclosure of the reason for any
particular exercise of such power or discretion or performance of duty or the
material upon which such reason will be or might have been based is
prohibited. Furthermore, confidentiality extends to anything forming part of the
accounts of an international trust. Notwithstanding the above a procedure
exists for disclosure of information through an application to the court but
the law itself provides that the court shall issue an order for disclosure of
information or the document require to be produced is of paramount importance
to the outcome of the case. Of great importance to an investor in deciding as to whether to
establish a trust is the question of taxation. The law makes it very clear
that the income and gains of an international trust derived or deemed to be
derived from sources outside No requirement for registration of the trust under any law is imposed.
On the contrary it is expressly provided that an international trust is
exempted from any obligation for such registration. Use of trusts Trusts offer several advantages
and can be used in a number of ways: Individuals who have income arising outside their country of
residence, which they do not wish to remit to that country, can arrange for
such income to be remitted to the trustees of a settlement in another
jurisdiction to be held in accordance with the trust deed and letter of
wishes. Individuals with substantial assets outside their country of
residence, which country may in the future extend its exchange control
restrictions to include the remittance of overseas funds, may wish to retain
the flexibility of overseas funds by transferring these to a settlement. Individuals, who may wish to divest themselves of personal assets for
fiscal or other reasons, can arrange for those assets to be transferred to
the trustees of a settlement and to be invested in accordance with the trust
deed and letter of wishes. Persons permanently leaving one country and taking up residence in
another may obtain maximum fiscal advantage, so far as the new country of
residence is concerned, by placing assets in a suitable settlement. Persons who wish to invest in businesses overseas but do not wish
profits and dividends to be remitted to their country of residence, may set
up a settlement to undertake the investment in the overseas business. |
